By Andrea Shalal-Esa
NATIONAL HARBOR, Maryland, Sept 15 (Reuters) - The Pentagon pressed United Technologies Corp on Tuesday to cut costs on the engine it builds for Lockheed Martin Corp's F-35 fighter, but said problems with that engine still do not justify spending billions on an alternate F-35 engine.
Pentagon spokesman Geoff Morrell said a mishap that damaged an F135 engine built by Pratt & Whitney, a United Technologies unit, raised questions about Pratt's work, not the single engine approach.
'It's a concern with regards to how Pratt & Whitney is developing this engine and with regards to, frankly, how the program office is managing that development,' Morrell told reporters at the Pentagon.
'We have all got to focus harder on getting this engine to perform to the level that we know it can,' he said, noting the Pentagon acquisition chief Ashton Carter had initiated a high- level independent review of Pratt's cost structures that is due to report back early next month.
Air Force Major General C.D. Moore, the program's deputy executive officer, said the Pentagon was pressing Pratt for a reduction comparable to the 30 percent cut it achieved for the F-22 fighter engine.
He said work on the short-takeoff, vertical-landing (STOVL) version of the F-35 accounted for a significant part of the $1.9 billion in cost overruns already seen on the engine.
Moore said Pratt had cut costs on the F119 engine that powers the F-22 fighter by 30 percent and the Pentagon expected the company to achieve comparable cuts on the F135 engine, which is based on the F119 engine.
The STOVL version includes a lift fan built by Britain's Rolls Royce Group PLC, which has experienced significant challenges, Moore told Reuters on the sidelines of the Air Force Association annual conference.
Rolls is a supplier to United Technologies' Pratt & Whitney unit for the F135 engine, the primary engine for the F-35. It is also part of a team with General Electric Co that is developing an alternate F-35 engine -- a project the Obama administration wants to terminate.
Lawmakers have repeatedly defied the wishes of past administrations to continue funding the project, but President Barack Obama and Defense Secretary Robert Gates have dug in their heels on what they call wasteful spending.
Congressional aides are closely watching an investigation
into what caused damage to a Pratt F-35 on Friday and officials expect to have answers soon. Moore said the investigation was ongoing, but initial indications were that the problem did not appear to be caused by a design defect.
William Begert, head of business development for Pratt, told reporters on Tuesday that Pratt's proposal was a cost-plus contract for 37 engines that trimmed the cost of the F135 engines from the last batch by at least 10 percent.
'This is a major step in the direction of getting down the cost curve to where we want to be,' Begert said.
He said Pratt had offered the F-35 program fixed-price terms in July, but officials opted for a cost-plus structure at this stage of the engine's development. Pratt said it remained ready to offer a firm, fixed-price bid if the program wished.
GE and Rolls-Royce offered the program a fixed-price proposal for their next batch of F136 engines. The offer is still being reviewed, said team spokesman George McLaren.
Moore told Reuters that cost-plus contracts give the Pentagon more insight into a company's cost structure, and that was important at this point, given efforts to get Pratt's engine costs under control.
Begert said Pratt was willing to assume responsibility for some further cost growth under the terms of the latest production proposal and had invested heavily to continue to drive costs lower in the longer term
He said the Pentagon's goal was to reach the 'learned out' cost by 2014 when Pratt will have produced 250 engines.
Begert about 20 Pentagon officials visited Pratt last Thursday and Friday for an exhaustive review of actions Pratt is taking to get the longer term costs under control.
Begert said Pratt continued to work very closely with Rolls-Royce, whose work on the lift fan has contributed heavily to the cost overruns, on the STOVL version. 'That has been a very difficult challenge. That's the part that we continue to struggle with,' Begert added.
(Reporting by Andrea Shalal-Esa; editing by Tim Dobbyn and Andre Grenon) Keywords: UNITEDTECHNOLOGIES ENGINES/ (andrea.shalal-esa@thomsonreuters.com + 1 202 354 5807; Reuters Messaging: andrea.shalal-esa.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NATIONAL HARBOR, Maryland, Sept 15 (Reuters) - The Pentagon pressed United Technologies Corp on Tuesday to cut costs on the engine it builds for Lockheed Martin Corp's F-35 fighter, but said problems with that engine still do not justify spending billions on an alternate F-35 engine.
Pentagon spokesman Geoff Morrell said a mishap that damaged an F135 engine built by Pratt & Whitney, a United Technologies unit, raised questions about Pratt's work, not the single engine approach.
'It's a concern with regards to how Pratt & Whitney is developing this engine and with regards to, frankly, how the program office is managing that development,' Morrell told reporters at the Pentagon.
'We have all got to focus harder on getting this engine to perform to the level that we know it can,' he said, noting the Pentagon acquisition chief Ashton Carter had initiated a high- level independent review of Pratt's cost structures that is due to report back early next month.
Air Force Major General C.D. Moore, the program's deputy executive officer, said the Pentagon was pressing Pratt for a reduction comparable to the 30 percent cut it achieved for the F-22 fighter engine.
He said work on the short-takeoff, vertical-landing (STOVL) version of the F-35 accounted for a significant part of the $1.9 billion in cost overruns already seen on the engine.
Moore said Pratt had cut costs on the F119 engine that powers the F-22 fighter by 30 percent and the Pentagon expected the company to achieve comparable cuts on the F135 engine, which is based on the F119 engine.
The STOVL version includes a lift fan built by Britain's Rolls Royce Group PLC, which has experienced significant challenges, Moore told Reuters on the sidelines of the Air Force Association annual conference.
Rolls is a supplier to United Technologies' Pratt & Whitney unit for the F135 engine, the primary engine for the F-35. It is also part of a team with General Electric Co that is developing an alternate F-35 engine -- a project the Obama administration wants to terminate.
Lawmakers have repeatedly defied the wishes of past administrations to continue funding the project, but President Barack Obama and Defense Secretary Robert Gates have dug in their heels on what they call wasteful spending.
Congressional aides are closely watching an investigation
into what caused damage to a Pratt F-35 on Friday and officials expect to have answers soon. Moore said the investigation was ongoing, but initial indications were that the problem did not appear to be caused by a design defect.
William Begert, head of business development for Pratt, told reporters on Tuesday that Pratt's proposal was a cost-plus contract for 37 engines that trimmed the cost of the F135 engines from the last batch by at least 10 percent.
'This is a major step in the direction of getting down the cost curve to where we want to be,' Begert said.
He said Pratt had offered the F-35 program fixed-price terms in July, but officials opted for a cost-plus structure at this stage of the engine's development. Pratt said it remained ready to offer a firm, fixed-price bid if the program wished.
GE and Rolls-Royce offered the program a fixed-price proposal for their next batch of F136 engines. The offer is still being reviewed, said team spokesman George McLaren.
Moore told Reuters that cost-plus contracts give the Pentagon more insight into a company's cost structure, and that was important at this point, given efforts to get Pratt's engine costs under control.
Begert said Pratt was willing to assume responsibility for some further cost growth under the terms of the latest production proposal and had invested heavily to continue to drive costs lower in the longer term
He said the Pentagon's goal was to reach the 'learned out' cost by 2014 when Pratt will have produced 250 engines.
Begert about 20 Pentagon officials visited Pratt last Thursday and Friday for an exhaustive review of actions Pratt is taking to get the longer term costs under control.
Begert said Pratt continued to work very closely with Rolls-Royce, whose work on the lift fan has contributed heavily to the cost overruns, on the STOVL version. 'That has been a very difficult challenge. That's the part that we continue to struggle with,' Begert added.
(Reporting by Andrea Shalal-Esa; editing by Tim Dobbyn and Andre Grenon) Keywords: UNITEDTECHNOLOGIES ENGINES/ (andrea.shalal-esa@thomsonreuters.com + 1 202 354 5807; Reuters Messaging: andrea.shalal-esa.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.